The Unexpected Billionaires of the AI Boom

SPEAKER_1 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

K. Oanh Ha (0:08)

This summer, Bloomberg reporter Cindy Wang traveled to Kaohsiung. It's an industrial port city in southern Taiwan.

Shub is there to visit a company most people have never heard of, Kingslide.

Cindy Wang (0:20)

It's just very unassuming, factory buildings. Nothing like fancy, nothing like what you can see in Silicon Valley or something like that. You wouldn't imagine that that's sitting at the center of the AI boom.

K. Oanh Ha (0:34)

But it is right at the center of the AI gold rush. In August, Kingslide's 89-year-old founder, Ling Zongqi, briefly became Taiwan's richest person. Ling is now one of the world's wealthiest people, according to the Bloomberg Billionaires Index.

But he didn't get rich making AI chips or software. Kingslide makes metal rails.

Cindy Wang (0:58)

That may sound like a very ordinary piece of hardware, but as AI servers have become much bigger and heavier and more expensive and more complicated, these rails have become increasingly important.

K. Oanh Ha (1:14)

These rails work exactly like the ones in your kitchen drawer.

But Kingslide's industrial rails can hold AI servers weighing hundreds of pounds, so that they can be pulled easily from a rack for maintenance. And American tech giants like Nvidia are spending billions of dollars to build data centers that house these servers.

Catherine Thorbecke (1:33)

The AI story has really gone from the software story to one of the biggest physical infrastructure buildouts really in the world.

K. Oanh Ha (1:40)

That's Bloomberg opinion columnist Catherine Thorbecke.

Catherine Thorbecke (1:43)

I think when we're talking about especially chip suppliers and sort of all the companies that go into building data centers, we think of Nvidia GPUs and we think of TSMC chips, but there's all these tiny little parts that without access to them, you can't build your data centers.

K. Oanh Ha (1:58)

And the providers of these tiny little parts are creating a class of new billionaires all over Asia.

Cindy Wang (2:04)

Whenever people talk about AI billionaires, they usually think about the obvious names, like Jensen Huan of Nvidia or OpenAI like Sam Altman and all these big and well-known names. But our reporting show that there is another group emerge and these are the entrepreneurs who sell the picks and shovels of the AI boom.

K. Oanh Ha (2:28)

This is the Big Take Asia from Bloomberg News. I'm Oanh Ha.

Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever-shifting region. Today in the show, the little-known manufacturers behind the AI boom. How an unglamorous corner of the supply chain is minting a new batch of billionaires and the risks of having critical AI infrastructure concentrated in just one part of the world.

Since ChatGPT burst onto the scene in 2022, the AI race has been framed largely as a software battle. Who can build the most powerful models? But the smartest model is useless without the machines that power it, the servers sitting in massive data centers. And that's turned the AI race into an infrastructure one. Here's Bloomberg Opinion's Catherine Thorbecke.

Catherine Thorbecke (3:27)

So the numbers are really quite staggering. The biggest tech companies are expected to spend, I believe it was roughly $700 billion this year.

And Goldman Sachs actually projected that spending on AI infrastructure could reach between $920 billion and $1.4 trillion in 2027 So the really enormous checks are going into physical infrastructure. So GPUs, servers, data centers, cooling, electricity and sort of the grid. You know, R&D and model development does still matter enormously, but I think the biggest constraint isn't necessarily now whether you can do the software development to build a better model. It's whether you can get enough chips, enough power and enough data center capacity to really run it.

K. Oanh Ha (4:11)

And the companies providing the essential nuts and bolts of this infrastructure are part of a supply chain deeply entrenched in Asia. Take Kingslide. The Taiwanese firm started out in the 1980s, making furniture handles and drawer slides for American and European brands.

But as Chinese manufacturing took off in the 2000s, buyers could get the same parts for less, forcing the company to pivot.

Cindy Wang (4:36)

At that time, a big client of theirs, it's an American client, told them that amid the rising of the Chinese manufacturing, this client demanded Kingslide to cut their prices by 30%. Otherwise, the client would like to choose a Chinese supplier instead. So, Kingslide decided to walk away from the customer. Eventually, they decided that they have to pivot to serve the server clients.

Just in a very short period of time, they was able to secure orders from companies like IBM or Compaq, these server makers. So, they started to supply the server rail kits since 2000 And that's how they could spend decades honing their craft and build up this capability. And when the AI boom finally arrived a couple of years back, they were able to keep up with this increasingly and very strong and very fast demand from very important clients now.